BDX’s Buyout Offer for BCR Is Up to $330

Exactly six months ago, Becton, Dickinson (BDX) offered to buy CR Bard (BCR) for $317 per share.

The deal called for BCR shareholders to get $222.93 in cash plus 0.0577 shares of BDX for each share of BCR they owned.

It’s easier for an acquiring company to offer shares to make a purchase. This is especially true if their shares are overpriced. The firm being bought, however, prefers more cash since the shares of a buying firm can go down. You always want some protection from a crash.

With this deal, it was about 70% cash and 30% stock. The $317 offer was a 25.3% premium to BCR’s previous closing price.

Shares of BCR shot up, but not to $317 per share. For one thing, shares of BDX fell a little bit. That’s natural for the stock doing the buying. Also, the market valued BCR slightly below the value of the deal because you never know if the deal will fall though. Things like this have happened before.

Just after the deal was announced, BCR was valued about 3% below BDX’s offer. Over the last six months, that discount has gradually melted away. It now seems certain the deal will happen sometime in Q4. On Friday, the discount was just 0.1%.

The good news for BCR shareholders is that BDX has rallied recently. That means the buyout price is higher. Going by Thursday’s close, the buyout price for Bard is $330.48 per share. This turned out to be a very good deal for us.

Here’s a chart of BCR (blue) along with the deal’s price (red). Note that the blue line is closing the gap even as the red line goes higher.

One minor update on BCR/BDX. The European Commission approved the deal contingent upon Becton divesting its soft tissue core needle biopsy product line. That’s no problem. Here’s the press release.

“We continue to make good progress on the Bard acquisition and the conditional clearance from the European Commission is a positive step forward,” said Vincent A. Forlenza, chairman and CEO of BD. “As expected, we have committed to divesting certain assets associated with our soft tissue core needle biopsy product line, which we acquired with CareFusion, to satisfy the conditions to closing requested by the European Commission. We continue to expect that the BD and Bard transaction will close in the fourth calendar quarter of 2017, subject to customary closing conditions and additional regulatory approvals, including the U.S. Federal Trade Commission and other regulatory bodies.”

Posted by on October 23rd, 2017 at 2:26 pm


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